Saturday, January 30, 2010

This Bloomberg piece on the state of the art market includes the following:

"Christie’s, along with Sotheby’s and Phillips de Pury & Co., abandoned guaranteeing minimum prices to sellers at the end of 2008. Many owners of high-value pieces, particularly contemporary works, turned to private transactions rather than risk high-value works at auction in a falling market. 'You will see guarantees coming back,' said [Christie's CEO Edward] Dolman. 'But it won’t be like the height of the market in 2007. We’ll be looking to share the risk much more. ...' Christie’s is currently discussing guarantees with certain sellers, Dolman said."

Wednesday, January 27, 2010

At the close of his September 2007 oral ruling granting Mass MoCA summary judgment in its lawsuit against artist Christoph Büchel, District Court Judge Michael Ponsor said: "I would just say, as an admonition, not to be overly comforted by my [decision], because I would imagine if this matter goes before the First Circuit, it will be scrutinized afresh, and only a reckless person would predict what the Court of Appeals is likely to do with the very complicated issues that this cases raises."

Well, he was right about that. Today the First Circuit reversed his decision, holding that "the record permits the inference that … Museum staff members were disregarding [Büchel's] instructions and intentionally modifying 'Training Ground' in a manner that he did not approve." (Longtime readers will recall that I was one of Büchel's lawyers at the District Court level. Volunteer Lawyers for the Arts kindly stepped in to handle the appeal, along with George Conway and his team at Wachtell, Rosen, Lipton & Katz, on a pro bono basis. As is obvious from the result, they did a terrific job on the appeal.) The Court forcefully held that VARA applies to unfinished works, and clearly rejected Mass MoCA's "contention … that the unfinished installation might constitute a joint work of Büchel and the Museum." A good day for artists' rights.

The LA Times reports: "Artist Shepard Fairey is facing a criminal investigation in connection with his admitted misconduct in the ongoing legal case with the Associated Press."

Not good.

Sergio Muñoz Sarmiento says: "To what extent will this affect the merits of the 'fair use' argument is unknown." But, as Ben Shefner points out, "the civil copyright case may now be the least of his worries."

Tuesday, January 26, 2010

I've been meaning to flag Michael Rushton's characteristically thoughtful response to my post last week on the moral hazard argument against deaccessioning. He helpfully marshals a lot of the academic commentary on agency problems generally, though concedes "the literature on nonprofits is not as deep." His bottom line:

"In the end ... I appreciate DZ's point that we just are not yet in a position to say with accuracy whether the costs of the moral hazard I worry about exceed the benefits from flexible access to funds through deaccessioning in times of crisis. But I will maintain the cost is there, even if, under new, relaxed norms governing deaccessions, the costs would not immediately be apparent."

One quick thought in response. We already have real-world experience we can draw on to assess the effects of a permissive deaccessioning regime on museum management. U.S. museums routinelydeaccession to raise money to buy more art. Is there any evidence that that leads to poor management (in the area of acquisitions or otherwise)? Does it seem to encourage "pet projects and perquisites and risky schemes that are contrary to the interests of the organization"? My understanding is that most (or at least many) European museums do not deaccession at all (not even to buy more art). Do they seem better managed than their U.S. counterparts? It would make for a fascinating research project. In any case, it's interesting that you never hear about the moral hazards of acquisition-related deaccessioning.

Monday, January 25, 2010

"A woman taking an adult education class at the Metropolitan Museum of Art accidentally lost her balance and fell into 'The Actor,' a rare Rose Period Picasso, tearing the canvas about six inches along its lower right-hand corner." Good teaser headline from the NY Daily News here. The Art Market Monitor is surprised this sort of thing doesn't happen more often.

Wednesday, January 20, 2010

More reviews of The Art of the Steal, the Barnes documentary which opens theatrically soon. Film Journal International says "claims of objectivity, made by the filmmakers at [the NY Film Festival], are an artful dodge: The title says it all. The filmmakers side with those who argue that the Barnes Collection has been stolen. ... If the filmmakers had simply explained why the audience should care, beyond the fact that an imperious, dead millionaire’s trust had been broken, The Art of the Steal would have served the interests it ostensibly represents—the people who care about art."

One who doesn't side with those who argue that the Barnes Collection has been stolen is Lee Rosenbaum. In a post today with more on her visit to the recent Art Commission hearing on the project, she says the following:

"I don't agree with characterizing the transfer to Philadelphia as a 'theft.' I think that the Pennsylvania and Philadelphia powers-that-be understandably wanted to lure that valuable cultural resource to the big city. The Barnes board, to my mind, wrongly capitulated to that pressure."

Felix Salmon on an artwork, by Caleb Larsen, that "is so commercial that it can’t be collected." The purchase contract apparently includes the following:

"Artist has created a work of art titled 'A Tool to Deceive and Slaughter (2009)' ('the Artwork') which consists of a black box that places itself for sale on the auction website 'eBay' (the 'Auction Venue') every seven (7) days. The Artwork consists of the combination of the black box or cube, the electronics contained therein, and the concept that such a physical object 'sells itself' every week."

At his own website, Larsen explains: "Every ten minutes the black box pings a server on the internet via the ethernet connection to check if it is for sale on the eBay. If its auction has ended or it has sold, it automatically creates a new auction of itself. If a person buys it on eBay, the current owner is required to send it to the new owner. The new owner must then plug it into ethernet, and the cycle repeats itself."

Tuesday, January 19, 2010

In this Sunday's NYT Magazine, Arthur Lubow had an interesting article on artist Tino Sehgal, who makes "ephemeral' "live-action" works, a show of which opens at the Guggenheim later this month. The whole thing is fascinating, but, from an art law perspective, this bit caught my eye:

"Since there can be no written contract, the sale of a Sehgal piece must be conducted orally, with a lawyer or a notary public on hand to witness it. The work is described; the right to install it for an unspecified number of times under the supervision of Sehgal or one of his representatives is stipulated; and the price is stated. The buyer agrees to certain restrictions, perhaps the most important being the ban on future documentation, which extends to any subsequent transfers of ownership. 'If the work gets resold, it has to be done in the same way it was acquired originally,' says Jan Mot, who is Sehgal’s dealer in Brussels. 'If it is not done according to the conditions of the first sale, one could debate whether it was an authentic sale. It’s like making a false Tino Sehgal, if you start making documentation and a certificate.'"

Sunday, January 17, 2010

First, the story confirms that the museum's entire art collection will now "be sold at auction."

So we've got a real-life reminder that if we're unwilling to let a financially-troubled museum sell one or two works, the result may well be that it ends up having to sell all its works.

Now, it's interesting to read that the whole collection here "has been appraised at a value of around $2.1 million." Given that the museum has debts of "between $4.4 million and $4.8 million," this probably wasn't a case where deaccessioning could have been of much help.

But in theory, it could have been, and it still seems silly to me to say that, no matter the circumstances, a museum may never sell work to keep from having to shut its doors. Suppose that, instead of $2 million, the museum's collection was worth $200 million, or more. Would we still rather it close (and thus have to sell its entire collection at auction) than sell one or two works and stay afloat?

Michael Rushton says the answer is yes, because, in the long run, that will lead to better museum management overall. Actually, that's not quite right. What he says is that, if we relax the norms against deaccessioning, "we could see an unwelcome shift in museum management" (my emphasis). Well, sure, we could see that. But maybe we wouldn't. Maybe if we removed the deaccessioning taboo, we'd find that it isn't doing very much work at all towards improving museum management. Maybe we'd find that museums continue to be managed about as well as they are now. Consider in this context the "good" kind of deaccessioning: deaccessioning to raise money to buy more art. (For example.) Do we think that leads to lax asset management by museums? Do they spend their acquisitions budgets unwisely because they know they can always just sell some more work (rip it right out of the "public trust") any time they'd like to acquire something? Does it make them less diligent about fundraising etc.? I don't know, but no one seems to worry about that in the area of acquisitions.

The larger point, though, is: even assuming the deaccessioning taboo leads to somewhat better museum management in general, how do we know how much that better management is worth and when do its costs get large enough that they outweigh those benefits? It's not so much a time inconsistency problem as one of balancing certain costs (today and in the future) against extremely hard to measure benefits (today and in the future). So, according to the LA Times story, Fresno is part of "a growing list of about 20 U.S. museums of various types and sizes that have folded in the last year." In addition to that, "dozens of other museums have been forced to trim budgets, cancel or postpone exhibitions and/or layoff staff." At what point do we decide that the (certain) costs of the no-deaccessioning rule outweigh the (possible) benefits? When the National Academy closes its doors? When we lose the Detroit Institute?

I think, before signing on to accept these very real costs, I'd like to see a lot more evidence that relaxing the norm against deaccessioning -- even very slightly, as in the Dobrzynski Proposal -- would have such grave consequences for museum management generally.

According to The St. Petersburg Times, the Salvador Dali Museum needs $6 million to complete construction on a new building. The president of the museum's board says they "will be forced to take out loans using art from the Dali collection as collateral if the tax dollars or new contributions don't come through soon."

Thursday, January 14, 2010

The NYT's Robin Pogrebin reports on "a round-table meeting [this morning] billed as the first discussion of deaccessioning among state policymakers and museum professionals in a public setting." Brodsky's aim seems to be to "to make sure that we do not, in a crisis, see a massive privatization of art" -- so let me again just point out that the Ellis Rule would accomplish the same thing.

ARTINFO.com: "The New York Post reports that the Metropolitan Museum of Art has pulled images of the Prophet Mohammed from its galleries devoted to Islamic art and suggests that the move is the latest chapter in the museum’s 'history of dodging criticism.' Some Muslims believe that Islam forbids the delay of such images and have led protests in recent years objecting to their display in cartoons, most infamously in Denmark."

Monday, January 11, 2010

First, there were several letters to the editor in response, including one from the president and CEO of the J. Paul Getty Trust, but I liked the one from the Brandeis student best:

"Here’s a simpler, sounder system to guide deaccession: The bought can be sold. This system reserves the sanctity of donor intent, as well as that of artwork acquired under special circumstances. And it ignores the largely unjustified slippery-slope paranoia that if allowed to sell one piece of artwork in a time of need, then institutions would more easily part with others in the future. If the struggling institution purchased a piece of artwork free of restrictions preventing resale, then that institution should be permitted to sell it at will."

Dobrzynski responds to some of the responses here, including the following:

"Donors will not give art if they know it may some day sold. This is a canard: they already know (or should know) that their gifts may be sold to raise money for future acquisitions. Those who fear this put restrictions on their gifts."

I think that's quite right. Remember (and I know I've made this point a thousand times): we're not talking about moving from a world where works are never deaccessioned to one where suddenly it's okay to deaccession. We're talking about moving from a world where deaccessioning for one purpose (the purchase of more art) happens all the timeto one where deaccessioning for other valuable purposes (e.g., preventing a museum from having to close its doors or, worse, move 4.6 miles away to Philadelphia to a brand-spanking new facility designed by Tod Williams and Billie Tsien) is, in the right circumstances, occasionally permitted.

"Essentially, Dobrzynski here is taking the Kimmelman rule — that museums should get first dibs on any deaccessioning sale — and beefing it up with two extra layers: first arbitration, and second the option to buy in the wake of a public auction. Personally, I think that the Ellis rule is still the best option, since it puts the focus where it belongs — on the art, rather than on the museum. Both Dobrzynski and Kimmelman would let art disappear from a museum into private hands, never to be seen again; Ellis wouldn’t."

Andras Szanto has a long, interesting piece in The Art Newspaper on the situation facing US museums. The whole thing is worth reading, but, for obvious reasons, I found the following particularly interesting:

"According to current guidelines, museums can only sell art to buy other art, not to cover operations. Those rules exist for a good reason. But when finances are pushed to the brink, museums’ largest asset category—its art—is more likely to get a second look. 'Does it make sense to keep a large percentage of a museum’s art assets in storage, never to be seen, when the same museum is laying off curators?' asks a donor to several major American museums. 'How does one responsibly go to benefactors for more support?' Sensible reform proposals—for example, to allow sales when objects stay in the public domain—are already being floated."

The Art Market Monitor: "France’s density of museums, churches and private homes filled with art make it a cornucopia for crimes of opportunity, elaborate thefts and more nefarious activities."Derek Fincham adds some thoughts: "What happens to these stolen works? The mundane objects are stored until they can be sold later. The rare and valuable works are exported abroad illegally. Yet the rate of recovery for many of these works is very low."

The other day, I wondered about Richard Feigen's reference to "unrestricted paintings" at the Barnes. In response, Lee Rosenbaum emails a link to her 2004 NYT Barnes op-ed, which includes the following:

"[T]here are a number of steps the Barnes can take to make it possible to survive financially in Merion. .. The foundation could begin by selling unused or little-used assets. Chief among these: the foundation's 137-acre property in Chester County .... Auctioning off some of the foundation's ancillary collections -- some 5,200 objects and documents -- could also generate cash. ... While art museums are supposed to use sale proceeds solely for acquisitions, not operations, the Barnes considers itself an educational institution (and it doesn't acquire new works). In addition, legal strictures against selling the Barnes Foundation's holdings apply only to works on view in the galleries."

That's helpful, thanks. But is it me, or is Lee suggesting here (and Richard Feigen suggesting in his Art Newspaper piece) deaccessioning (if only just a smidgen) as a way to keep the Barnes from having to move?

Friday, January 08, 2010

"For two years the Los Angeles County Museum of Art has been quietly buying paintings and publicly selling them. Readers of Sotheby’s latest auction catalog may have noticed a group of old master paintings coming up for sale on Jan. 28. It isn’t the first time the museum has sold works from its permanent collection. Last year, in January and June, Sotheby’s auctioned paintings by Joshua Reynolds, Lucas Cranach the Elder, Pieter de Hooch and others, raising more than $6 million for the museum."

"My votes would be for the [Phillips] case in Boston, which goes to the heart of what is site-specific and whether or not the law covers that art world term, and the Daniel Moore case in Alabama, which may turn back a growing effort on the part of numerous colleges to claim anything associated with them as trademarked."

In my holiday weekend roundup earlier this week, I mentioned the "temporarily disappearing estate tax." On that topic, below is an advisory we are sending out to clients this week:

As you may have seen in the popular press, Congress adjourned last month without definitively addressing the transfer tax provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 applicable to years 2010 and beyond.

As we enter the new year, the result of this inaction is that Federal estate and generation-skipping transfer ("GST") taxes are repealed for the year 2010. In 2011, these taxes will be restored as they were in 2001; namely, with a top rate of 55%, an estate tax exemption of $1 million and an indexed GST exemption of $1.1 million. (By contrast, in 2009 each tax was levied at a flat 45% rate on transfers in excess of a $3.5 million exemption.)

The Federal gift tax will remain in effect in 2010 but at a maximum rate of 35% (as opposed to the 2009 top rate of 45%) and with a continued $1 million exemption. In 2011, the top gift tax rate will also revert to 55%, with a continued $1 million exemption.

Concomitant with the temporary repeal of the Federal estate tax, the automatic "step-up" in income tax basis for inherited property will no longer be available with respect to property received from decedents dying in 2010. Instead, heirs will receive a modified "carry-over" income tax basis in such property. In 2011, we will revert to the automatic "step-up" in basis regime.

The legislative debate over Federal transfer taxes is expected to continue after Congress returns from recess this month. We may also see debate in Albany as the New York legislature is asked to address important New York State estate tax issues raised by the temporary repeal of the Federal estate tax. It has been suggested that any state or Federal legislation passed this year may take effect retroactively, perhaps as of January 1, 2010.

While we hazard no guesses on the contours of any new law, be assured that we will be closely monitoring all developments.

Thursday, January 07, 2010

The Philadelphia Inquirer's Stephan Salisbury reports that "the Philadelphia Art Commission gave final approval yesterday to plans for the new Barnes Foundation gallery, clearing the way for the renowned collection of early modernist art to move from Merion to the Parkway in 2012 after years of impassioned controversy." Lee Rosenbaum has more, including a link to the design plans.

Kate Taylor has a story on the Barnes progress in the January Art Newspaper. In the same issue, art dealer Richard Feigen has a piece in the Barnes-was-stolen genre. He calls it "the biggest heist in history," a "kidnapping," an "abduction." I think the "theft" narrative is a little melodramatic -- Salisbury offers a persuasive counter-narrative here; see also here -- but, for the moment, I want to focus on two points in Feigen's essay:

1. As part of his argument why the Barnes could have stayed in Merion, he says that "shuttle-buses could run continuously from the Philadelphia Museum, a short 4.6 miles away." This point -- the closeness of the new location to the old -- is also emphasized in the Barnes documentary that's about to open, but doesn't it actually cut the other way? The new location is only 4.6 miles away. What's the big deal? Buses could continuously shuttle all the art lovers in Merion to the new museum!

As has been noted manytimes before, the works will be hung exactly as they were in the old space. The argument that the move -- a short 4.6 mile shuttle-bus ride away -- is a tragedy depends on the notion that, despite all of Tod Williams and Billie Tsien's good work, despite the fact that the galleries will be reproduced exactly as they were and the works will be hung exactly as they were, and despite the additional fact that many more people will get to see the works in the new location, something so valuable is lost in the move up the road that it justifies all the gnashing of teeth and rending of garments.

I just don't see it. A mistake? Perhaps. But I just don't see the tragedy. (And I suppose I should add here the usual caveat that I thought the museum should have stayed where it is.)

2. The other thing I wanted to mention was the following statement by Feigen: "Insufficient effort has been made to sell the redundant real estate of Barnes’s valuable farm, its 19th-century American pottery collection or unrestricted paintings in the offices, which have been appraised at more than $30m."

That's the first I've heard of any "unrestricted paintings." (Is the pottery collection also "unrestricted"?) Does anyone know what he's referring to?

Rebecca Tushnet flags a NYT piece on a garment company that has "installed a billboard in Times Square ... showing President Obama wearing one of its coats" and notes: "Obama might be the only prominent celebrity so unlikely to act against this type of use of his image that the publicity isn't accompanied by substantial risk."

I'll just add one quick point regarding the "moral hazard" argument against deaccessioning (which I alluded to Monday). I don't know to what extent, if any, sales of art could have solved the Fresno Museum's problems, but the logic of the "moral hazard" position is that we have to accept the loss of this museum (and, if The Deaccessioning Blog is right, perhaps as many as nine others in the near future) for the greater good of improving museum management generally (the argument being that, by taking the sale option off the table, the people who run our museums will be better motivated to properly manage them and, in the process, save their jobs; they can't just squander their resources and then look to sales of art to bail them out). That strikes me as a high cost to pay for the speculative benefits the no-deaccessioning regime is supposed to provide. We're losing something very real here. Are we confident that it's a price worth paying?

The AP: "A suburban Chicago man pleaded guilty Tuesday to swindling at least 250 people out of more than $1 million through the sale of counterfeit prints advertised as the work of Pablo Picasso and other major contemporary artists."

Monday, January 04, 2010

We begin 2010 where we started in 2009 -- with the deaccessioning debate in the pages of the New York Times. Over the holiday weekend, Judith Dobrzynski had an op-ed piece arguing that "de-accessioning shouldn’t be impossible — just nearly so." She begins by pointing out that "already some respected figures — David Gordon, former head of the Milwaukee Art Museum, and Richard Armstrong, director of the Solomon R. Guggenheim Museum, for example — are saying that the rule against selling art for any purpose other than buying more art is wrong," and then moves on to neatly summarize the case against the anti-deaccessioning hysterics:

"Many people don’t understand the problem. If the choice is between allowing a museum to fail (or make crippling cutbacks) and selling some art, what’s the big deal? Sell art! Most museums, after all, hold many works they have no room to display and stuff them into back rooms and off-site storage facilities. If museums are allowed to cull their collections to raise money to buy more art, why can’t they sell those very same pieces to solve their financial problems?"

The answer, according to the "strict constructionists," is that "once selling art to cover operating costs is allowed, it will become the first resort in bad times, not the last," and Dobrzynski says "on that score, they may be right. It’s human nature to test the line and, having gotten away with something, to do it again." This is the slippery slope argument we've seen manytimesbefore, so I won't rehash the same old arguments against it, but I do want to just emphasize that this view concedes that there is nothing inherently wrong with, say, the National Academy selling off a couple of works to keep its doors open -- it's not Stalinesque, it's not repulsive. It's just an empirical claim -- which Dobrzynski has the honesty to admit "may" (and therefore may not) be true -- that if we allow Museum X to sell work as a last resort that will lead Museums Y and Z to sell work as a first resort. It's the-folks-in-charge-of-our-museums-are-naughty-schoolchildren argument. The only thing standing in the way of a wholesale liquidation of our cultural heritage is the heroic members of the AAMD.

Anyway, all of this is just prelude to Dobrzynski's real point, which is a proposal to "amend the unwritten sales ban, but not end it":

"What if a museum had to argue its case for de-accessioning art before an impartial arbitrator? This neutral party would need to be schooled in art, art law and nonprofit regulations. Moreover, the museum would need to open its financial books completely, so that the arbitrator could see that all other reasonable avenues of fund-raising, as well as cutbacks, had already been exhausted. And it would need to open its cataloguing records and storerooms, to show that the departure of the works in question would not irreparably damage the collection and that no donor agreements would be violated. Most important, as part of any deal permitting the sale of art, the de-accessioning museum would have to offer the works to other museums first. If it received no offers, it could sell the pieces via a public auction — and any American museum would then have the opportunity to match a winning bid if it promised to keep the work in a public collection."

I think this is obviously a step in the right direction -- among other things, it incorporates elements of the Ellis Rule and the Kimmelman Rule, which are good things -- but, having conceded, as Dobrzynski does, that our museums hold more works than they can display and that they "are allowed to cull their collections" for purpose x ("to raise money to buy more art'), I would permit the same culling for purposes y and z, without making them jump through the hoop of appearing before an arbitrator. In other words, I would trust the people who run our museums to responsibly exercise their fiduciary duties and do the right thing. (Though I promise to give some more thought to Michael Rushton's well-stated moral hazardarguments in the near future.)

Dobrzynski has an interesting follow-up at her blog, where she notes that she "expected to be flooded with complaints about violating sacred principles. Instead, all of the feedback I've received has been positive." "Maybe we are maturing," she says.

The Deaccessioning Blog thinks "this is actually the best solution put on the table so far, and to my delight (and self-serving position) something not too far from what I have argued here."

Lee Rosenbaum speaks up on behalf of (as Dobrzynski puts it) the "purists" who turn "purple with apoplexy" at the "mere mention of art sales for operating money": "Actually, we strict constructionists don't believe that such sales should be allowed at all, even as a last resort. The 'slippery slope' argument is just the kicker. In truth, there's no such thing as a single 'last resort.' Smarter management, intensified fundraising, improved marketing, innovative earned-income strategies, and (truly the last resort) temporary cuts of expenses and staff are the right ways to meet financial crises. Selling the art is a seductively easy way to raise cash for operations and debt reduction. But it's the wrong way: Art is the raison d'être of museums and the 'deaccession or die' argument is specious." As I've noted before, Lee, alone among the purple-faced apoplectics, believes that museums should not be selling work for any purpose, including buying more art. [CORRECTION: See "Update" below.] Curious, then, that she closes her response to Dobrzynski's piece with a prayer for the Brodsky Bill, which, in its most recent version, allows sales for "refinement of collections" -- essentially enshrining the (to my mind hypocritical) AAMD position into law.

UPDATE: Lee Rosenbaum emails that it’s inaccurate to say that she "believes that museums should not be selling work for any purpose, including buying more art." Her view is that works that are "inferior in condition, quality, etc." – "in other words, … works that don't belong at the museum in the first place, because they are not useful for exhibition or scholarship" – may be sold, and the sales proceeds used to buy more art. That’s fair enough, and I regret the error, but I would just note that that view strikes me as much tougher than either (1) current museum practice (under which deaccessioning is decidedly not limited to works "that don’t belong in the museum in the first place") and (2) what would be permitted under the Brodsky Bill (with its massive exception for "refinement of collections"). I'm also not sure why, if all we're talking about are works that "don't belong at the museum in the first place," use of the sales proceeds should be limited to the purchase of more art. Are we worried that museums would be tempted to get rid of . . . stuff that doesn't belong there in the first place?